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OPPORTUNITY ORIENTATION—One clear pattern among successfulgrowth-minded entrepreneurs is their focus on opportunity rather than onresources, structure, or strategy.PERSISTENT PROBLEM SOLVING—Entrepreneurs are not intimidated bydifficult situations. Simple problems bore them, unsolvable ones do not warranttheir time.SEEKING FEEDBACK—Effective entrepreneurs are often described as quicklearners.INTERNAL LOCUS OF CONTROL—Successful entrepreneurs believe inthemselves. They believe that their accomplishments and setbacks are within theirown control and influence and that they can affect the outcome of their actions.TOLERANCE FOR AMBIGUITY Successful entrepreneurs thrive on thefluidity and excitement of such an ambiguous existence.CALCULATED RISK TAKING—Successful entrepreneurs are not gamblers.When they decide to participate in a venture, they do so in a very calculated,carefully thought out manner.HIGH ENERGY LEVEL—Many entrepreneurs fine tune their energy levels bycarefully monitoring what they eat and drink, establishing exercise routines, andknowing when to get away for relaxation.CREATIVITY AND INNOVATIVENESS—An expanding school of thoughtthinks that creativity can be learned.VISION—Not all entrepreneurs have predetermined vision for their firm. Inmany cases this vision develops over time as the individual begins to learn whatthe firm is and what it can become.PASSION—A fundamental emotional experience for entrepreneurs characterizedby a discrete emotion that is quite intense.TEAM BUILDING—The desire for independence and autonomy does notpreclude the entrepreneur’s desire to build a strong entrepreneurial team. Mostsuccessful entrepreneurs have highly qualified, well-motivated teams that helphandle the growth and development of the venture.Chapter 2/The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics5 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or inpart.

III.Dealing with FailureEntrepreneurs use failure as a learning experience. They have a tolerance for failure.The most effective entrepreneurs are realistic enough to expect difficulties and failures.If entrepreneurs deal effectively with grief that emanates from failure then they will notbecome disappointed, discouraged, or depressed. In adverse and difficult times, they willcontinue to look for opportunity.The Grief Recovery ProcessGrief is a negative emotional response to the loss of something important triggeringbehavioral, psychological, and physiological symptoms.The emotions generated by failure (i.e., grief) can interfere with the learning process.A “loss orientation” towards grief recovery, which focuses on the failure, can sometimesexacerbate negative emotional reactions to failure.A “restoration orientation,” alternatively, enables entrepreneurs to distract themselvesfrom thinking about the failure. However, avoiding negative emotions is unlikely to besuccessful in the long-runResearch indicates that entrepreneurs may recover more quickly from a failure if theyoscillates between a loss and a restoration orientation.IV.The Entrepreneurial ExperienceThe prevalent view of entrepreneurship in the literature is that entrepreneurs createventures. Its narrow framing, however, neglects the complete process ofentrepreneurship.An experiential view of the entrepreneur moves past the static “snapshot” approach toentrepreneurship and encourages consideration of entrepreneurship as a dynamic, sociallysituated process that involves numerous actors and events.The creation of sustainable enterprises involves three parallel, interactive phenomena:emergence of the opportunity, emergence of the venture, and emergence of theentrepreneur. None are predetermined or fixed—they define and are defined by oneanother.V.The Dark Side of EntrepreneurshipCertain negative factors may envelop entrepreneurs and dominate their behavior.Although each of these factors has a positive aspect, it is important for entrepreneurs tounderstand their potential destructive side as well.Chapter 2/The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics6 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or inpart.

The Entrepreneur’s Confrontation with RiskStarting or buying a new business involves risk. A typology of entrepreneurial styleshelps describe the risk-taking activity of entrepreneurs. In this model, financial risk ismeasured against the level of profit motive (the desire for monetary gain or return fromthe venture).FINANCIAL RISK—In most new ventures the individual puts a significantportion of his savings or other resources at stake.CAREER RISK—A question frequently raised by would-be entrepreneurs iswhether they will be able to find a job or go back to their old jobs if their ventureshould fail.FAMILY AND SOCIAL RISK—Entrepreneurs expose their families to the riskof an incomplete family experience and the possibility of permanent scars.PSYCHIC RISK—The greatest risk may be to the well-being of theentrepreneur.Stress and the EntrepreneurTo achieve their goals, entrepreneurs are willing to tolerate the effects of stress: backproblems, indigestion, insomnia, or headaches.WHAT IS ENTREPRENEURIAL STRESS?In general, stress can be viewed as a function of discrepancies between a person’sexpectations and ability to meet demands.Lacking the depth of resources, entrepreneurs must bear the cost of their mistakeswhile playing a multitude of roles, such as salesperson, recruiter, spokesperson,and negotiator. Simultaneous demands can lead to role overload.Entrepreneurs often work alone or with a small number of employees andtherefore lack the support from colleagues.A basic personality structure, common to entrepreneurs and referred to as type Apersonality structure, describes people who are impatient, demanding, andoverstrung.SOURCES OF STRESSResearchers Boyd and Gumpert identify four causes of entrepreneurial stress.Loneliness—Entrepreneurs are isolated from persons in whom they canconfide. They tend not to participate in social activities unless there issome business benefit.Chapter 2/The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics7 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or inpart.

Immersion in Business—Most entrepreneurs are married to theirbusiness. They work long hours, leaving them with little or no time forcivic recreation.People Problems—Most entrepreneurs experience frustration,disappointment, and aggravation in their experience with people.Need to Achieve—Achievement brings satisfaction. However, manyentrepreneurs are never satisfied with their work no matter how well it isdone.DEALING WITH STRESSIf stress can be kept within constructive bounds, it can increase a person’sefficiency and improve performance.Networking—One way to relieve the loneliness of running a business isto share experiences by networking with other business owners.Getting Away from It All—The best antidote could be a well-plannedvacation.Communicating with Employees—Entrepreneurs are in close contactwith employees and can readily assess the concerns of their staff.Finding Satisfaction Outside the Company—Entrepreneurs need to getaway from the business occasionally and become more passionate aboutlife itself; they need to gain some new perspectives.Delegating—Entrepreneurs find delegation difficult because they thinkthey have to be at the business all the time and be involved in all aspectsof the operation.Exercising Rigorously—Research demonstrates the value of exerciseregimens on relieving the stress associated with entrepreneurs.The Entrepreneurial EgoCertain characteristics that usually propel entrepreneurs into success also, if exhibited inthe extreme have destructive implications for entrepreneurs.OVERBEARING NEED FOR CONTROL—Entrepreneurs are driven by astrong desire to control both their venture and their destiny.SENSE OF DISTRUST Because entrepreneurs are continually scanning theenvironment, it could cause them to lose sight of reality, distort reasoning andlogic, and take destructive action.Chapter 2/The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics8 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or inpart.

OVERRIDING DESIRE FOR SUCCESS This can be dangerous because thereexists the chance that the individual will become more important than the ventureitself.UNREALISTIC OPTIMISM—When external optimism is taken to its extreme,it could lead to a fantasy approach to the business.VI.Entrepreneurial EthicsToday’s entrepreneurs are faced with many ethical decisions. As there is no simpleuniversal formula for solving ethical problems, entrepreneurs have to choose their owncodes of conduct; the outcome of their choices makes them who they are.VII.Ethical DilemmasEthics provides the basic rules or parameters for conducting any activity in an“acceptable” manner.Ethics represents a set of principles prescribing a behavioral code that explains what isgood and right or bad and wrong.Ethics may outline moral duty and obligations. Legality provides societal standards butnot definitive answers to ethical questions. Because deciding what is good or right or badand wrong is situational, instead of relying on a set of fixed ethical principles,entrepreneurs should an ethical process for making decisions.Ethical RationalizationsDecision makers use one of four rationalizations to justify questionable conduct: that the activity is not “really” illegal or immoral that it is in the individual’s or the corporation’s best interest that it will never be found out that, because it helps the company, the company will condone itMorally questionable acts can be classified as: nonrole, role failure, role distortion, androle assertion.The Matter of MoralityRequirements of law may overlap at times but do not duplicate the moral standards ofsociety.Some laws have no moral content whatsoever.Some laws are morally unjust.Some moral standards have no legal basis.Legal requirements tend to be negative, morality tends to be positive.Legal requirements usually lag behind the acceptable moral standards of societyChapter 2/The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics9 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or inpart.

Complexity of DecisionsBusiness decisions, in the context of entrepreneurial ethics are complex. Why? Ethical decisions have extended consequences. Ethical questions have multiple alternatives—the choices are not always “do” or“don’t do.” Ethical business decisions often have mixed outcomes. Most business decisions have uncertain ethical consequences. Most ethical business decisions have personal implications.Online Ethical Dilemmas in E-Commerce Slow demise of face-to-face interactions cause entrepreneurs to find ways to buildtrust. Entrepreneurs recognize that online consumer reviews are used to inform purchasingdecisions and are posted to reputation management systems (Amazon and Yelp). Entrepreneurs find it far greater to exhibit strong ethical responsibility in theiractions.VIII. Establishing a Strategy for an Ethical EnterpriseEntrepreneurs need to commit to an established strategy for ethical enterprise.Ethical Codes of ConductA code of content is a statement of ethical practices or guidelines to which an enterpriseadheres.Ethical ResponsibilityA strategy for ethical responsibility should encompass three major elements: ethicalconsciousness, ethical process and structure, and institutionalization.IX.Ethical Considerations of Corporate EntrepreneursRecognize the fine line between resourcefulness and rule breaking.Recognize that unethical consequences that can result in organizations where there arebarriers to innovation.Recognize that companies can take action to combat unethical behavior by: Establishing flexibility, innovation, and employee initiative and risk-taking. Removing barriers to innovation faced by entrepreneurial middle managers. Including an ethical component in corporate training.X.Ethical Leadership by EntrepreneursThe value system of an owner/entrepreneur is the key to establishing an ethicalorganization.The owner’s actions serve as a model for all other employees to follow.Chapter 2/The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics10 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or inpart.

Caring is a feminine alternative to the more traditional and masculine ethics based onrules and regulations. by considering the interests of others and maintaining healthyrelationships, caring—according to feminists—can lead to more genuinely moralclimates.XI.Entrepreneurial MotivationThe decision to behave entrepreneurially is the result of the interaction of several factors: The individual’s personal characteristics The individual’s personal environment The relevant business environment The individual’s personal goal set The existence of a viable business idea The comparison of probable outcomes with personal expectations The relationship between entrepreneurial behavior and the expected outcomes Entrepreneurial persistence—the choice to continue with an entrepreneurialopportunity regardless of counterinfluences or other enticing alternativesSUGGESTED ANSWERS FOR DISCUSSION QUESTIONS (END-OF-CHAPTER)1.,2.What is “entrepreneurial cognition” and how does it impact the mind-set ofentrepreneurs? How does “metacognition” come into play here?In attempting better to understand the driving forces within entrepreneurs, we can gain amore complete perspective if we take a psychological look at entrepreneurs and considerthe entrepreneurial mind-set. Part of that mind-set includes the package of mentalprocesses that entrepreneurs possess, which include attention, remembering, producingand understanding language, solving problems, and making decisions. Entrepreneurialcognition refers to the knowledge structures that people use to make assessments,judgments, or decisions involving opportunity evaluation, venture creation, and growth.The metacognitive perspective calls attention to cognitive adaptability, which can bedefined as the ability to be dynamic, flexible, and self-regulating in one’s cognitionsgiven dynamic and uncertain task environments. Before an entrepreneur is prepared toevaluate alternative strategies, the entrepreneur must first formulate a strategy to framehow he or she will “think” about this task. This process is metacognitive. The processresponsible for ultimately selecting a response (i.e. a particular venture strategy) iscognitive—the process responsible for ultimately selecting how the entrepreneur willframe the entrepreneurial task is metacognitive.Entrepreneurs have a tolerance for ambiguity, are calculated risk takers, and exudepassion. What do these characteristics mean for any potential entrepreneur?Entrepreneurs face uncertainty compounded by constant changes that introduceambiguity and stress into every aspect of the enterprise. A tolerance for ambiguity existswhen the entrepreneur can deal with the various setbacks and changes that constantlyconfront him or her.Successful entrepreneurs are not gamblers—they are calculated risk takers. They doeverything possible to get the odds in their favor, and they often avoid taking unnecessaryChapter 2/The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics11 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or inpart.

risks. These strategies include getting others to share inherent financial and business riskswith them—for example, by persuading partners and investors to put up money, creditorsto offer special terms, and suppliers to advance merchandise.Entrepreneurial passion is a fundamental emotional experience for entrepreneurs. It is adiscrete emotion that is quite intense being described as an underlying force that fuels ourstrongest emotions, or the intensity felt when engaging in activities that are of deepinterest, or the energy that enables entrepreneurs to achieve peak performance.3.Is it true that most successful entrepreneurs have failed at some point in theirbusiness careers? Explain.The most effective entrepreneurs are realistic enough to expect difficulties and failures.Entrepreneurs use failure as a learning experience; hence, they have a tolerance forfailure.4.How should failure be dealt with by entrepreneurs? How does “grief” play a role inthis process?As noted above, the most effective entrepreneurs are realistic enough to expectdifficulties and failures. If they can deal effectively with any grief that emanates from thefailure then they will not become disappointed, discouraged, or depressed by a setback orfailure. In adverse and difficult times, they will continue to look for opportunity. In thisway entrepreneurs will believe that they learn more from their early failures to form thefoundation of later successes. Research shows that an entrepreneur recovers more quicklyfrom a failure if he or she oscillates between a loss and a restoration orientation. Thisoscillation means that the entrepreneur can gain the benefits of both orientations whileminimize the costs of maintaining either for an extended period.5.Entrepreneurship has a “dark side.” What is meant by this statement? Be completein your answer.The dark side of entrepreneurship is a destructive course that exists within the energeticdrive of a successful entrepreneur. There are three major traits that are associated with thedark side of entrepreneurship: risk, stress, and the entrepreneurial ego. All potentialentrepreneurs need to be aware that the dark side of entrepreneurship exists.6.What are the four specific areas of risk that entrepreneurs face? Describe each.The four specific areas of risk are as follows:1.Financial risk—In most new ventures the individual puts a significant portion ofhis savings or other resources at stake.2.Career risk—A question frequently raised by would-be entrepreneurs is whetherthey will be able to find a job or go back to their old jobs if their venture shouldfail.3.Family and social risk—Entrepreneurs expose their families to the risk of anincomplete family experience and the possibility of permanent scars.4.Psychic risk—The greatest risk may be to the well-being of the entrepreneur.Chapter 2/The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics12 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or inpart.

7.What are the four causes of stress among entrepreneurs? How can an entrepreneurdeal with each of them?There are four causes of stress: loneliness, immersion in business, people problems, andneed to achieve. To reduce stress, entrepreneurs must define the cause of the stress. Afterclarifying the cause of stress, the entrepreneur can combat excessive stress byacknowledging its existence, developing coping mechanisms, and probing personalunacknowledged needs.8.Describe factors associated with the entrepreneurial ego.The factors associated with the entrepreneurial ego include: an overbearing need

V. The Dark Side of Entrepreneurship A. The Entrepreneur's Confrontation with Risk 1. FINANCIAL RISK 2. CAREER RISK 3. FAMILY AND SOCIAL RISK 4. PSYCHIC RISK B. Stress and the Entrepreneur 1. WHAT IS ENTREPRENEURIAL STRESS? 2. SOURCES OF STRESS a. Loneliness b. Immersion in Business c. People Problems d. Need to Achieve 3. DEALING WITH STRESS .